Ten Years Ago: Buffett’s Berkshire Backs Over 100 Muni Bonds In Last Two Days

Source: CNBC

Warren Buffett’s new bond insurance company has backed more than 100 municipal bonds in the past two days, according to Reuters.

The wire service quotes a Moody’s Investor Services spokesman as saying, “We have rated approximately 112 Berkshire Hathaway Assurance Corp-insured issues between yesterday and today.”

Reuters calls it a “development that shows just how fast the new unit is growing in a field where rivals are struggling.”

Ambac and MBIA have been on the brink of losing their own AAA ratings from Moody’s, Standard and Poor’s and Fitch due to exposure to potentially big losses from risky investments like collaterialized debt obligations (CDOs). In the last few minutes, however, CNBC’s Charlie Gasparino reported that banks working on a bailout for Ambac could announce a dealMonday or Tuesday.

Even though BHAC doesn’t have its own AAA credit rating yet, the bonds it guarantees are getting the top rating from Moody’s Investors Service.

In a news release, Moody’s says BHAC’s guarantees are backed by Berkshire-owned National Indemnity Co. (NICO), which does have its own AAA credit rating. VP Bruce Ballentine, co-author of a new Moody’s report on BHAC says in the release, “Moody’s Aaa insurance financial strength rating on NICO reflects its superior capitalization, its unique ability to assume large and unusual risks, its expertise in managing long-tail portfolios, and the implicit support from Berkshire.” (I found a link to the report, but it’s a bit expensive.)


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